2011-09-20

*About teh post title - I was going to title this post Broken Windows Vista, but then realized that was redundant.

Before going forward, just want to shoutout the Graeber Invention of Money post again. His highlighting the fact that one of the foundational ideas about economics is totally bogus is pretty awesome. Also too, teh interview wherein we learn that teh symbol of teh Liberty Fund is an excellent example of how money, debt and credit pre-existed barter and was probably a result of government regulations and trial lawyer type compensation processes.

Also too, a disclaimer. This post is Part 2 – and if you had a problem with Part 1 then you should probably give this one a bye. This post is going to be speculation about the reasons and related bits associated with the mistakes I pointed out in the previous post.

One final bit of preamble.
TLDR version: FYIGM is actually a generous interpretation.

So anyways, there’s a bunch of different things you can read into the broken windows fallacy. Firstly, you’ll notice that there is a premium of sorts for wealth on hand as opposed to earned money. The owner of the broken window is worse off because they had to spend cash that they had – but the window repairman is not better off because he exchanged his labours for the replacement cost of the window. Now if you stipulate that the opportunity cost to the repairman is zero – IOW he doesn’t have to cancel other window replacement jobs or postpone window replacement training or skip that year’s window replacement trade show (GlazeCon 1849 – the cosplay is practically pornographic) – then the window repair is pure windfall profit for him. So what difference is there in the value between the window owner’s six francs or the window repairer’s six francs? Obv. none.

Not so obv. This misconception – that available cash is worth more than earned cash – has been carried through to this very day. For instance, the capital gains tax rate is lower than income tax rate. If you accept the conservative/libertarian never before observed Laffer curve concept that the higher the taxes the greater the disincentive to produce – the result is that it is somehow less harmful to directly “disincentivize” producers than it is to “disincentivize” investment. Apparently the ideas surrounding “supply-side” economics does not extend to the market for labour.

The other big problem I had with Bastiat was the labelling of things as useless. He doesn’t accept the idea that the window repairman’s exercising of his trade has value in and of itself. That since the net wealth of the village is unchanged, the window repairman’s efforts are cancelled out and somehow “useless.” It is as if he could not see the value of maintaining skill and expertise in local industries. The type of attitude that would denounce tariffs of all types and push for widespread free trade.

Actually, it’s worse than that. Because the things he rails against have as their intended purpose things which are clearly indicated. In the case of tariffs, it’s protecting local industry – in the case of “make work” programs it is keeping people employable and engaged in society – in the case of the assorted social programs that are always at risk of funding cuts it is the provision of those social services. Those things all have value, but Bastiat as well as modern day conservatives claim that they don’t. Usually based on this dollar value taxes-are-evil approach.

Lastly but not leastly, the whole broken windows fallacy thing gives us a new and more complete definition of modern conservatism than Galbraith’s. Observe that in the broken window story, society is no worse off for having lost the window. Overall wealth is unchanged because an otherwise idle labourer has the opportunity to produce a replacement. But the window owner is definitely worse off. And this is the parable that Bastiat uses in order to advocate for policy decisions that affect all of society – including the window repair d00d. That’s conservatism in a wingnutshell – this idea benefits me personally therefore it should be the way it is for everyone.

This not only covers the greedy position conservatives have about government providing only the services they want and need and nothing else, all the while complaining about having to pay for any of it. It also applies to social conservatives and their insatiable need to prevent anyone else from having a good time. Their religion has forced them to suffer a joyless existence made bearable only by the future promise of eternal happiness and communion with the most powerful being in the universe. And if that’s good enough for them,,,

It’s not that conservatives lack empathy, it’s that their empathy only works backwards. It’s not that they can’t imagine themselves in position of someone less fortunate or successful – it’s that when they do so they project so much of their own experiences that they actually become offended. Because they achieved whatever level of success and comfort they have, everyone should be able to as well. That for conservatives, imagining what it is like to be in someone else’s shoes really means wondering why being insulted that people have the audacity to not do exactly as they do all the time.

And so the way they understand the world is through that lens. Their metaphors and analogies are all of the Me First variety. Tax cuts are good because they want to pay less in taxes (even if those tax cuts don’t target them but only benefit the uber-rich, because they may be uber-rich some day). Cutting social safety net programs is okay because they don’t use them. Something about your mother. Hence government budgets are like family budgets meaning the anti-Keynesian belt tightening austerity during recessions and crazy deficits during market booms. Hence “if you have nothing to hide,,,” since of course everything they do is by definition societally accepted if not revered. Hence all sorts of authoritarian abuses because there would never be a reason to racially profile them.

And finally I started Part 1 by mentioning that I was going to be very critical of Claude Frédéric Bastiat, but that we should bear in mind that his time was a very different one. While it was the Age of Enlightenment, enlightenment is a process whereby one starts of unenlightened. That his writings show the twisted thoughts of a selfish sociopath with no empathy for his fellow man, he was probably still pretty progressive for his time. However, the folks that buy into his century and a half old worldview - they don't have the same excuse.

3 comments:

You might enjoy this link, D-KW:http://www.bbc.co.uk/blogs/adamcurtis/2011/09/the_curse_of_tina.html

It's a short history of the rise of the Think Tank in the modern world. Not the *original* style of think tank tasked with looking for creative solutions and alternatives, but the proliferation of Wingnut Welfare institutions tasked with narrowing the field of choice by promoting one existing solution (There Is No Alternative):

Hayek told Fisher to set up what he called a "scholarly institute" that would operate as a dealer in second-hand ideas.